Zero-proof concept: How Altina Drinks made its own market

This article was first published on June 16, 2021.

Altina Drinks is a three-year-old non-alcoholic beverage brand with a clearly articulated goal: to change the Australian drinking cultures that its founders, Dr Christina Delay and Alan Tse, sought to escape.

Delay comes from an academic and IT project management background, having completed her PhD in plant science in 2016. 

Keenly aware that a life in academia meant decades would pass before having a substantial impact on the world, she pivoted to IT before becoming disillusioned with corporate drinking culture, and its effects on her health.

Tse is a chartered accountant and has previously worked at Treasury. He was also fed up by the same corporate drinking culture, and together, he and Delay set out to change the assumption that social events require alcohol.

A lofty aspiration, sure, but consider how widespread and accepted smoking was in workplaces through most of the 20th century. Smoking in an office or indoors is now all but gone from public life.

Since raising $27,000 via a crowdfunding campaign on StartSomeGood in 2018, the co-founders have bootstrapped the company’s growth, with Altina Drinks’ revenue growing at a rate of 300% per year over the past three years.

Source: Altina Drinks Facebook page.

Five key takeaways

1. If you’re a social enterprise, it’s crucial that you identify where you fit in with other organisations undertaking the same work.

2. Physical space is a big expense for young companies. You can get a better return on your investment by making sure your space serves more than one purpose.

3. When running multiple sales channels, you should find a uniform price that lets you make your margins regardless of consumer choice.

4. You need to be prepared to invest time and resources in educating your consumers to understand your price point when they’ve never bought similar products.

5. To compete with multinationals, you need to focus on your customer connection, personal brand story, and craftsmanship. That is what resonates with consumers.

The ethics of marketing alcohol alternatives

As a social enterprise, Tse and Delay have given clear thought to where their company sits within the broader health and advocacy efforts of the alcohol-free movement.

Altina Drinks partners with not-for-profit organisations like Hello Sunday Morning, which built a drinking monitoring app connecting like-minded people, and Shannon Whan’s Sober in the Country, which works to reduce drinking in the regions.

Source: supplied

There are ethical considerations when selling alcohol alternatives too.

Larger multinational companies in the alcohol space are increasingly turning to alcohol-free options for their biggest brands, which can be perceived as a gateway to their alcoholic options, Delay tells me.

Many former drinkers also have triggers when it comes to alcohol, which the non-alcoholic alternatives can set off when they closely mimic the product design.

“It’s a challenge in the perception of the alcohol-free industry, particularly where advocacy organisations are concerned,” says Delay.

“We tackle that by holding ourselves accountable to standards — not advertising to minors, not encouraging [drinking], all the same standards you would abide by as an alcohol company in how you communicate and market your product. We have come at that by creating a unique drinking experience — it’s not a non-alcoholic version of an alcoholic drink.”

Pricing a new category

Altina Drinks makes what it calls ‘zero-proof craft cocktails’. In 2018, when Delay and Tse launched their first products, the market had no concept of what that meant. Equally, the founders had no products that they could price theirs next to.

“We’re not a beer, a wine, or a spirit. We had to define what that price point is”, Tse tells me.

Native botanicals weren’t cheap, nor readily available. Sure, non-alcoholic beverages have the advantage of no excise tax, but they’re still a world away from the cheaper ingredients of juices, or soft drinks.

“It’s not about the tax, but the cost of ingredients. That’s what drives our cost structure up, but you can taste the difference,” says Tse.

As Altina sells both through its online store and retailers, it also needed to find a price that worked for both.

The non-alcoholic space beyond soft drinks and juice is exploding in the UK and the US, and slowly creeping to Australia, Tse explains. But it’s still a relatively new marketplace, and pricing comes down to an issue of education for new consumers.

When Altina Drinks first started, its signature drink was priced at $30 per bottle. Now, it’s offered at just under $20.

Source: Altina Drinks Facebook page.

The complications of high-end non-alcoholic manufacturing

When it came to actually making the product, Altina Drinks initially looked at the methods the alcohol industry uses, then the native plants available in Australia. Dr Delay took a bush food tour led by an Aboriginal elder on the south coast to learn about native ingredients.

The next step was harder: how to extract the best flavours without alcohol.

“It turns out it’s not as easy as you think. That’s why no one had done it before,” Delay explains.

They needed to create a bespoke manufacturing process, with equipment that could scale up production, most of which was unavailable in Australia. This meant lots of imported bits and pieces from Italy and Germany.

Meanwhile, to create the taste, Delay and Tse had to reverse engineer the experience of alcohol, without the alcohol. 

This includes which flavours hit your nose first, the way they interact with your tongue, and how the taste changes and develops as you sip the drink or eat food.

For example, one of Altina’s drinks, Light Me Up, has Australian forest berry, a native eucalypt, as the top note. Then it is supported with different taste elements: apple as a base for sweetness, green tea for dryness, and spice extracts for warmth. 

Source: supplied

While its first 30 litre batches were produced using native ingredients grown from a backyard farm in Canberra, Altina Drinks now makes batches of 5000L-10,000L at a time, necessitating commercial suppliers. 

Roughly 18 months into its growth journey, Altina Drinks opened its own warehouse and manufacturing space in Canberra, which has since been converted into a quasi-shopfront, where customers can get a tour of the production facility and buy products before they go.

The company has also evolved its product mix since launching. As convenience stores and independent bottleshops closed during last year’s lockdown, Altina Drinks launched a subscription pack, which it claims was Australia’s first in the non-alcoholic market. And for customers who are looking for one drink instead of a full bottle, the company created a 220ml can serving size.

Competing with multinationals

Now that some of the biggest alcohol multinationals in the world have made serious commitments to low- and no-alcohol options, smaller companies like Altina Drinks are getting attention as potential acquisitions.

Two of the biggest kombucha brands, Mojo Kombucha and Remedy Kombucha, were started by couples in their garage, and are now owned by Coca Cola and Kirin respectively. It’s a similar story in the craft beer space, where many of the smaller distilleries are now owned by much larger companies.

Some multinationals have also started accelerator programs, and follow companies from early on in their journeys, says Delay.

“Obviously we can’t compete with marketing budgets of those sizes,” she says. 

“We can compete on our craftsmanship, our personal stories, our ability to connect with our customers on a level that they aren’t able to do.”

In the US and UK, the craft alcohol-free distilleries are now being bought up, and Tse and Delay believe it’s only a matter of time before the same trend is seen locally.

I asked them if that would be their exit-plan in the medium to long term, and they’ve clearly considered the implications of selling.

“We’re led by a mission and purpose …  At the end of the day, if it’s something that would let us create a bigger impact, it’s something that we would be considering,” Tse says.

The crucial inflection point will be after the brand has saturated all the independent bottleshops it can reach. To enter the big chains, and work with the big players, Tse believes they’ll need to be part of a bigger business.

“The commercial reality of chains and big businesses is exclusive supplier relationships. Already, a few chains that we’ve went to have said, ‘we don’t deal with independent, small brands, we deal with big brands. If you’re not with them, we can’t stock your product’,” he says.